It’s 4:18 a.m., and the strip mall in Hanover Park, Ill., is deserted. But tucked in back, next to a closed-down video store, an employment agency is already filling up. Rosa Ramirez enters, as she has done nearly every morning for the past six months. She signs in, sits down in one of the 100 or so blue plastic chairs that fill the office, and waits. Over the next three hours, dispatchers will bark out the names of those who will work today.

In cities across the country, workers stand on corners, line up in alleys or wait in a neon-lighted beauty salon for rickety vans to whisk them off to warehouses miles away. Workers say the 15-­passenger vans often carry 22 people. They sit on the wheel wells, in the trunk space or on milk crates or paint buckets. Female workers complain that they are forced to sit on the laps of strangers. Some workers must lie on the floor, other passengers’ feet on top of them.

This is not Mexico. It is not Guatemala or Honduras. This is Chicago, New Jersey, Boston.

The people here are not day laborers looking for an odd job from a passing contractor. They load the trucks and stock the shelves for some of the U.S.’s largest ­companies—Walmart, Nike, PepsiCo’s Frito-­Lay division—but they are not paid by them; instead they work for temp ­agencies. On June 7, the Labor Department reported that the nation had more temp workers than ever before: 2.7 million. Almost one-fifth of the total job growth since the recession has been in the temp sector. One list of the biggest U.S. employers placed Kelly Services second only to Walmart.

Outsourcing to temp agencies has cut deep into the U.S. job market: 1 in 5 manual laborers who move and pack merchandise is now a temp, as is 1 in 6 team assemblers, who often work at auto plants. This system insulates companies from workers’-­compensation claims, unemployment taxes, union drives and the duty to ensure that their workers are legal immigrants. Meanwhile, the temps suffer high injury rates, and ­many of them endure hours of unpaid waiting and face fees that depress their pay below the minimum wage. Many get by renting rooms in run-down houses, eating dinners of beans and potatoes and surviving on food banks and taxpayer-funded health care. They almost never get benefits and have little opportunity for advancement.

The proportion of temp workers in the labor force reached its peak in early 2000, before the 2001 slump and the Great Recession. But now temp work is roaring back 10 times as fast as private-sector employment as a whole—a pace “exceeding even the ­dramatic run-up of the early 1990s,” ­reports the American Staffing Association. The overwhelming majority of the growth is in blue collar jobs in factories and warehouses as the temp industry sheds its refined, typing-­pool image of the past. Last year more than 1 in 20 blue collar workers were temps.

The rise of the blue collar permatemp helps explain one of the most troubling aspects of the recovery. Despite a soaring stock market and steady but meager job growth, many workers are returning to the workforce in temporary or part-time jobs. This trend is intensifying the U.S.’s decades-long rise in income inequality, in which low- and middle-­income workers have seen their real wages stagnate or decline. On average, temps earn 25% less than permanent workers.

Many economists say the growth of temp work will continue beyond the recession. One likely accelerant of the trend: the health-reform law known as Obamacare.

The Rise of “Temp Towns”
Ramirez, a 49-year-old mexican immigrant with a curly bob of brown hair and thin glasses, has been a temp worker for the better part of 12 years. She has packed free samples for Walmart, put together displays for Sony, printed ads for Marlboro, made air filters for the Navy and boxed textbooks for elite colleges and universities. None of the work led to a full-time job.

Even though some of Ramirez’s assignments last for months, every day is a crapshoot. She must check in at the temp agency by 4:30 a.m., wait and then, if she is called, take a school bus to a plant. Even though the agency, Staffing Network, is her legal employer, she is not paid until she gets to an assembly line at 6 a.m. Today the dispatcher will call most workers to pack razors for Philips Norelco.

In Kane County, Illinois, where Ramirez lives, 1 in 16 workers is a temp. Such high concentrations of temp workers exist in what researchers have begun to call “temp towns,” including places like Grand Rapids, Mich.; Middlesex County, New Jersey; Memphis; California’s Inland Empire; and Lehigh County, Pennsylvania. In New Jersey, white vans zip through an old Hungarian neighborhood in New Brunswick, picking up workers at temp agencies along French Street. In Joliet, Ill., a temp agency operated out of a motel meeting room once a week, supplying labor to the layers of logistics contractors at one of Walmart’s biggest warehouses. In Greenville County, South Carolina, near BMW’s manufacturing plant, 1 in 11 workers was a temp in 2011, twice as many as a decade before.